ELIZABETH HARRINGTON v. CAP GEMINI ERNST & YOUNG HONG KONG LTD

HCCL 10/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO.10 AND NO.61 OF 2002

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BETWEEN

AND

HCCL 61/2002

BETWEEN

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Before : Hon Stone J in Chambers

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D E C I S I O N

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The applications

1. There are three summonses before the court, all of which represent further procedural ‘fall out’ from the judgment of this court, dated 17 May 2004, consequent upon the trial of this action.

2. By this judgment, which speaks for itself, the plaintiff was successful in obtaining damages against the defendant in the sum of US$46,666.00.

3. An initial post-judgment application, dated 7 July 2004, led to a further judgment upon interest and costs.  In the papers prepared for that hearing it was disclosed that on 9 April 2003 the defendant had paid into court the sum of HK$771,072.08, which at the then rate of exchange represented some US$98,000.  The situation, therefore, was that the plaintiff, Miss Harrington, had recovered less than 50% of the sum paid into court, a fact which was reflected in the costs order then made.

4. This costs order was that the plaintiff was to have the costs of the action up to and including the date of the payment in, that is, 9 April 2003, but that the costs incurred after the date of this payment into court until the date of judgment, 17 May 2003, were to be to the defendant.

5. At the time of this post-judgment costs hearing, allusion had been made to the status of the monies presently standing in court, and there was preliminary argument about whether the judgment sum, together with interest thereon, in the particular circumstances could be satisfied by payment out of the monies presently in court.  Such circumstances included not only the cross-orders as to costs, but also the fact that, pursuant to two pre-trial interlocutory orders the plaintiff, a resident of the United States, had lodged in court the cumulative sum of HK$475,000 as security for the defendant’s costs, and the defendant’s contention was that the monies designated as security for costs would be totally insufficient to satisfy the costs balance enuring in favour of the defendant consequent upon the striking of a ‘costs account’ between these parties.

6. No view on this issue then was expressed by the court since the question was not before it for decision.  Now, however, the point has been specifically raised by two of the summonses, the third being an application by the plaintiff for an extension of time in which to appeal the substantive judgment of 17 May 2004.

Plaintiff’s summons, dated 15 September 2004, pursuant to Order 59, rule 15

7. By this summons the plaintiff sought a 14 day extension in which to serve her Notice of Appeal “if she so decides”.

8. In moving this application Mr Kemp noted that his client was still within time to appeal, and that as matters presently stood the deadline imposed by the rules was 28 September 2004.

9. Although he accepted that his client already had had in excess of four months to consider her position regarding an appeal, he submitted that she had been travelling and only recently had returned to Hong Kong to consult with her advisers as to the position, and that an additional 14 days would greatly assist.

10. Initially I had been of the view that there was a jurisdictional difficulty, and that extensions of time in which to appeal were matters within the exclusive purview of the appellate court.  However, it has been pointed out that in fact this is not so, and that the express terms of Order 59 rule 15 permit a first instance court to extend the period in which to appeal “on application made before the expiration of that period.”

11. On that basis, therefore, the question properly was one for this court, which, after hearing Mr Kemp and Mr Carolan for the defendant, immediately dismissed this application.

12. No affidavit evidence was placed before the court to justify the exercise of the discretion thus sought, and in my view it was signally insufficient for Mr Kemp to observe, as he did, that this was a difficult case requiring reflection, and that more time was required.

13. For my own part I do not consider that the particular point in issue — which arises from the specific finding of fact that there was no independent agreement sufficient to circumvent the strictures of section 5(2) of the Employment Ordinance — poses problems of identification, and with respect I am unable to grasp why four months has been insufficient in order to make a considered decision as to an appeal.  In any event no evidence has been filed telling me why it has not been possible to deal with this question up to the present, and absent such evidence I declined to exercise my discretion in favour of the plaintiff.  In short, there was no material before me upon which my discretion properly could be exercised.

14. Accordingly, the application failed.  The costs of this application must be to the defendant, as indeed the summons concedes.  I so order.

Defendant’s summons dated 7 September 2004

Plaintiff’s summons dated 15 September 2004

15. These applications are two sides of the same coin, and concern the status of the monies presently standing in court.

16. By its summons, dated 15 September, which is taken out pursuant to Order 22, rule 5, the plaintiff seeks payment out of court of the judgment sum presently standing in its favour, together with interest thereon.  The calculations on the face of the summons, with interest up to and including 20 September 2004, have resulted in the total amount now sought to be paid out being HK$454,081.82, which it is said should be paid out of the sum of HK$771,072.08, which was the sum paid into court in by the defendant on 9 April 2003.

17. The defendant’s own application looks to have been something of a pre-emptive strike, and was taken out some eight days earlier.  On its face it is said to be made pursuant to Order 45, rule 11, Order 47, rule 1 and Order 22, rule 5.

18. Although the summons is drafted in some detail, the gravamen of the defendant’s application is that the plaintiff should not be permitted to take out of court the sum of money representing the fruits of her judgment, and that such monies should remain in court as security for the defendant’s costs which have accrued post 9 April 2003, the date of payment into court — which costs, it is asserted, will very significantly exceed those costs such as have accrued to the plaintiff from the commencement of the action to the date of such payment in.  The defendant further seeks immediate payment out of the balance of its funds paid in after deduction of the judgment sum.

19. In addition, paragraph 1 of this summons prays that execution on the judgment of 17 May 2004 be stayed in favour of the plaintiff pending taxation of the parties’ respective bills of costs.  On this element of the application Mr Carolan, for the defendant, made it clear that he did not seek relief pursuant to Order 45, rule 11 — which applied to a stay of execution sought on the ground of matters which have occurred since the date of judgment — and that he confined his application herein to Order 47, rule 1, which delimits the power to stay execution by writ of fi fa “wherein there are special circumstances which render it inexpedient to enforce the judgment or order …”

20. Mr Carolan put his position thus.  His bill of costs, which now was available in properly taxable form, demonstrated a costs bill subsequent to the date of payment into court in the sum of HK$1.2 million, of which there presently was in court, as designated security for costs, the sum of HK$475,000 only.  On the other side of the fence, he said, the rough estimate of the plaintiff’s costs for the year prior to the payment into court stood at an egregious HK$1.6 million, notwithstanding that the defendant’s costs, for the like period prior to the date of payment in, amounted to something in the order of HK$250,000.  In the absence of better data, therefore, Mr Carolan invited the court to proceed on the basis that the plaintiff’s current costs estimate, which was in rough form and not in the form required for taxation, was vastly inflated, and was not to be trusted.

21. If this was correct, ran his submission, the overwhelming probability was that the costs balance in his client’s favour, upon a netting down of the respective taxed costs in favour of plaintiff and defendant, would all but extinguish the total of plaintiff’s judgment sum together with such taxed costs as the plaintiff would be able to secure.

22. Thus, he said, to permit the plaintiff now to take out of court the sum that it wished, in satisfaction of its judgment debt, would inevitably mean that at the end of the day the defendant would be left with a very considerable unsatisfied costs’ shortfall, and would be placed in the position of having to pursue Miss Harrington, a non-resident plaintiff, for such shortfall.  On the other hand, if the status quo was to be preserved in terms of the monies presently in court, and a stay also was to be correspondingly granted in terms of execution by writ of fi fa, then the position could be reviewed after taxation, or at the least preparation by the plaintiff of a costs bill in properly taxable form, at which time the court would have relevant and accurate figures at its disposal, and could come to a considered view as to the merits of any payment out of monies now standing in court.

23. For the plaintiff Mr Kemp strongly resisted this argument.  He made two primary points.  There was no doubt, he said, that his client had a valid and unimpugned judgment in her favour; a quantifiable sum in terms both of principal and interest had been awarded, and there was no reason in principle why such recovery now should be impeded.  Second, Mr Kemp pointed out that notwithstanding the limited stay, in terms of execution by writ of fi fa, that the defendant now sought, on the defendant’s own case the plaintiff was entirely free to pursue other modes of enforcement, such as a 21 day notice as a prelude to winding up, or a garnishee/charging order.  No “special circumstances” existed in this case, he said, and his client should be permitted to obtain payment out of that amount representing her judgment sum, together with interest, which had been the subject of the plaintiff’s earlier payment into court.

24. And in any event, said Mr Kemp, he also could play the “numbers game” : on the basis that his broadly-estimated bill was to be reduced by, say, two thirds, so that he ended up recovering, say, even HK$500,000 for his costs prior to the date of payment in, the defendant would be virtually completely ‘protected’ in costs terms — if its own costs bill was taxed down to HK$1 million from the current figure of HK$1.2, and it already had in court the amount of HK$475,000 in security for costs, this would leave it but marginally short in terms of the alleged costs shortfall about which it was complaining.  In effect, he submitted, the defendant’s submissions on this subject amounted to a thinly-disguised attempt to gain security for costs greater than that which earlier had been ordered, and a greater security over and above that to which it was entitled.  Accordingly he submitted that the court should not hesitate to grant the application for payment out.

Decision

25. The resolution of these applications remains the only matter upon which a decision is required.

26. I have reflected upon the arguments which have been persuasively presented on each side.  Let me take the issues in turn.

27. The application for a stay of execution, which has been run in parallel by the defendant together with resistance to any payment of monies out of court, is refused.

28. I am unable to see why the plaintiff should not be free to utilize all means of execution of a valid judgment which are open to her under the law.  The judgment is good on its face, and has not been sought to be impugned by the defendant.  On his own case Mr Carolan did not seek to obtain a stay other than pursuant to Order 47, rule 1, and I decline to grant even that limited form of relief.

29. I turn now to the issue of payment out of that portion of the monies currently in court which represents the judgment debt, together with interest.  I see these monies in court as quite a separate issue.

30. Order 22, rule 5 reads, in part :

“If any money paid into court in an action is not accepted in accordance with rule 3, the money remaining in court shall not be paid out except in pursuance of an order of the Court which may be made at any time before, at or after the trial or hearing of the action; …”

31. Under this scheme the court retains the power to supervise these monies, and not to permit payment out save and except when it is clear that this course is just in all the circumstances.  Such is not clear to me as matters currently stand.

32. I see no reason why I cannot take into account the fact that the present situation as to costs remains opaque, to say the least.  Mr Carolan has levelled strong criticism about the costs figures put up by the plaintiff, and of the form in which these figures were couched.  I presently make no comment upon his dark suspicion that there is, at its lowest, a certain tactical element at play in this connection.  However, looking at the matter broadly, and whilst I stress that I retain an open mind, it does seem a trifle odd that there is so apparent a disparity between the plaintiff’s estimate of HK$1.6 million for the period from the commencement of the action to the date of payment in, when set against the defendant’s costs for the like period of some $250,000.

33. In this regard there may well be a very good explanation; after all, as Mr Kemp observed, entirely reasonably, the plaintiff had had to make the running in cases such as this, and the present estimate of expenditure merely reflected that obvious fact.  He may well be right, and, if I may say so, it goes without saying that so far as this court is concerned his integrity is unquestioned.

34. The more pertinent question, however, is why should the court be placed in what is, in effect, a speculative position?  Why should the court have to guess as to the true situation in making an important decision in terms of authorizing the payment out of monies in court?  However, this undoubtedly is the position in which the court currently finds itself, and it is a position which has proved fertile ground for argument, much of it necessarily based on supposition.

35. I appreciate Mr Kemp’s argument that, in effect, the defendant was attempting wrongly to obtain additional unauthorized security for costs, and also his reliance upon certain observations in Powell v. Vickers [1906] 1 KB 71, at 77, per Collins MR, whom in that case pointed out that the onus was on the defendant to give some good reason why the money should remain in court, and that that onus had not been met.

36. However, in my view in the present case the defendant currently has provided such good reason.  I bear in mind also that in Powell, op cit., one of the factors influencing Collins MR was that to allow the money to remain in court “would be to give the defendants a security for costs to which they are not entitled”, and that, as Mr Carolan has observed, this provides an obvious distinction with the facts of this case; it is clear, Mr Carolan submitted, both from the fact of the past orders of this court for such security, and indeed from Mr Kemp’s disinclination to afford himself the proffered opportunity to place on affidavit his submission, upon instructions, that Miss Harrington currently was a Hong Kong resident (and thus would be available to be executed against in terms of any costs deficit), that the defendant indeed was entitled to such security —although as matters had transpired clearly it had not succeeded in obtaining enough.

37. At the end of the day, therefore, this court is required to weigh the competing interests, and in the exercise of my discretion I have decided not to accede to the present application of the plaintiff for payment out of court of a sum equivalent to the judgment sum plus interest.  Whilst naturally I appreciate that it would be signally more convenient for the plaintiff thus to obtain satisfaction of her judgment debt, I am unsatisfied that to make an order in the terms currently sought would be ‘just and convenient’ in the accepted legal sense.  In short, in my judgment the status quo is to be preserved until the overrall position as to costs becomes considerably clearer.

38. Given this aim, not only do I decline to make any order for payment to the plaintiff out of any part of the monies presently in court, but I further decline to make any order for payment out to the defendant either —the defendant, as earlier noted, itself having asked for payment out of the balance of its funds as paid in after retention of the judgment sum and interest thereon.

39. Accordingly, I order that all monies presently in court are to remain so until further order.

40. It follows, therefore, that the parties’ respective applications for payment out are refused, for the time being at least.  In so far as may be necessary, and absent agreement thereon, I will hear the parties upon the appropriate form of order upon the summonses before the court.

41. As to costs, it seems to me that the fair disposition of the costs of these summonses is best achieved by the reservation of such costs to such further hearing before this court as subsequently is to be scheduled for disposition of these funds in court.  I make an order nisi to this effect.

HCCL 10/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO.10 AND NO.61 OF 2002

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JUDGMENT ON INTEREST AND COSTS

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Introduction

1. On 17 May 2004 this court handed down its judgment in this case.

2. In that judgment, which speaks for itself, the plaintiff in both actions, Miss Elizabeth Harrington, was awarded the sum of US$46,666.00.

3. Paragraph 110 of that judgment indicated that, absent agreement thereon, counsel would be heard on the issues of interest and costs.

4. Pursuant to this order, the defendant herein has now restored this matter for argument. This judgment represents the conclusions of the court upon the matters thus canvassed.

Interest

5. Three matters arise for decision.

6. The first is the date from which interest upon the judgment sum is to run. The plaintiff submitted that the appropriate date was the end of May 2001, and the defendant maintained that the correct date was the beginning of October 2001.

7. In the event the issue was compromised, counsel agreeing that the date from which interest was to run should be 3 September 2001. I so order.

8. The next issue was the rate of interest. I see no reason to vary the usual order in commercial cases. Interest upon the judgment sum from the agreed date of commencement is to run at the rate of 1% over prime (that is, 6%) until the date of judgment, and thereafter at the judgment rate from time to time prevailing. I so order.

9. The third issue was the one which provoked the most controversy. It arose by reason of the existence of a payment into court, which is a fact which has resonance in terms both of interest and of costs.

10. On 9 April 2003 the defendant herein paid into court the sum of HK$771,072.08, which I am told at the then rate of exchange represented some US$98,000. Thus the amount of the payment into court was approximately twice the value of the sum ultimately awarded to the plaintiff at trial.

11. There is no issue as to the fact of this payment in, and that the plaintiff elected not to accept it in satisfaction of her cause of action, and proceeded to have the case tried.

12. In so far as the issue of interest is concerned, Mr Carolan maintains that interest is only to run from the agreed date, that is 3 September 2001 until the date of payment in, that is 9 April 2001. He says that the plaintiff ought to have accepted the payment in, and not having done so it would be wrong to continue to charge interest on the judgment sum.

13. For the plaintiff Mr Kemp maintains that such an approach is fallacious. He says that whilst the purpose of a payment in is to protect the position as to costs, it does not follow, such payment not having been accepted, that this has the effect of preventing interest from running upon the sum ultimately awarded. He points out that pursuant to Order 22 rule 1(8) RHC the defendant pays into court a sum in satisfaction not only of the debt or damages claimed but also an element of interest up to the date of the payment in. This enables the court to effect a comparison between the amount paid in and the amount of money subsequently awarded, inclusive of interest, which in turn facilitates determination of the issue of costs, but solely the issue of costs.

14. Notwithstanding the enthusiasm with which Mr Carolan invested the point, I remain unconvinced that the answer he propounded is the correct one. I fail to see why non-acceptance of a sum, inclusive of interest, which is paid into court should have the effect of precluding the award of interest upon such lesser sum as is eventually adjudged due for the period between the date of non-acceptance of the payment in and the date of judgment.

15. Were Mr Carolan to be correct, there would be a lacuna in the period for which interest would run, given that interest undoubtedly runs upon the judgment debt, and continues so to do until payment. I resist this notion. The position, it seems to me, is tolerably clear. The plaintiff who declines a payment in, inclusive of an interest element, is in peril as to costs should that sum which is recovered after trial, inclusive of interest, be less than the sum paid in. Thus is like compared with like. The plaintiff who gambles unsuccessfully may suffer in terms of costs subsequent to the date of payment in, but does not thereby forfeit interest for the full period on the sum in fact recovered.

16. So in this discrete debate I think that Mr Kemp is right. In my view the concept of the payment into court sounds to the adjudication of costs, and not to the award of interest.

17. Accordingly, the order of the court is that interest is to run upon the sum of US$48,666.00 at the rate of 6% per annum from 3 September 2001 to 17 May 2004, and thereafter at the judgment rate from time to time prevailing until payment.

Costs

18. There is no such doctrinal difference when it comes to the question of costs. Mr Kemp naturally accepts that the effect of an award at trial which fails to 'beat' a payment into court is to place his client at risk on costs.

19. However, he submits that costs are discretionary, and that which should be taken into account in the exercise of such discretion is the fact that the plaintiff in this case succeeded upon the primary issue of establishing a contract between herself and the defendant, but effectively 'lost' in terms of quantum because she was unable to surmount the problem posed by the provisions of section 5(2) of the Employment Ordinance, Cap.57, and was unable to get home in terms of her specific performance argument. This was to be compared, he said, with the position of the defendant throughout to the effect that no contract of employment ever had come into existence. In the circumstances he submitted that an appropriate order would be no order as to costs, alternatively that his client should bear a percentage only of the defendant's costs subsequent to the date of payment in.

20. In response Mr Carolan emphasized that the rules as to payment into court are clear, and that there was no unusual feature of this case which would justify a departure from the usual principles. In particular, he noted, in its judgment this court had eschewed any finding of bad faith on the part of his client, and had simply found to be incorrect the defendant's belief that a contract had not come into existence.

21. In this instance I think that Mr Carolan is right. After reviewing all the circumstances of this case I can see no reason why the defendant should be denied the protection it sought by means of a legitimate payment into court, or, to look at the issue through the other end of the rifle, why the plaintiff, having gambled in the face of a realistic payment in, should now in some wise be excused from the hard consequence of such a gamble. Adversarial litigation is not pleasant. It is a game often played for high stakes, and the rules are clear. The defendant offered to dispose of this highly contentious claim on terms, and not unfavourable terms at that, and the plaintiff refused. Having thus elected to move to trial, and having signally failed to recover any more than approximately half of that which was on offer, I am afraid that I am unpersuaded by the plaintiff's argument that the normal position as to costs should be modified.

22. Accordingly, subject to specific costs orders already in existence, I order that the plaintiff is to have the costs of this action up to and including the date of payment in, that is, 9 April 2003, but that the costs of this action incurred after the date of payment into court until the date of judgment, that is 17 May 2004, are to be to the defendant, to be taxed if not agreed.

Monies currently in court

23. The present position, as I understand it, is that there is not only the sum of US$98,000 (or its HK$ equivalent) which has been paid into court by the defendant, but that there is the further cumulative sum of HK$475,000 which has been paid into court by the plaintiff pursuant to two orders of this court for the provision of security for costs.

24. I refer to the existence of such monies at this stage because in the course of this hearing there was some argument about whether the judgment sum, together with interest thereon, could be satisfied out of the sum paid into court by the defendant.

25. In this connection Mr Carolan was at pains to emphasise that there should be no such payment out until the cross claims in terms of costs were quantified, and the court was able to see the whole picture which, he said, would almost certainly reveal a substantial costs balance in his client's favour for which the sum presently standing in court as security for costs would be insufficient. For his part Mr Kemp maintained that by this stratagem the defendant was in effect achieving an unwarranted stay of execution, although, after raising the point, he drew back from asking for an immediate determination of this issue.

26. In my view he was right to do so. This argument is premature. No application is before me for payment out of any monies which have been paid into court. There is not even yet in existence a sealed judgment, absent which the plaintiff cannot move to execute against the defendant, an Hong Kong company.

27. I leave open the interesting question as to whether the plaintiff can seek to enforce its judgment against the monies paid into court by the defendant notwithstanding the possibility (Mr Carolan would say 'probability') that the monies currently available to the defendant in the form of security for costs prove insufficient to satisfy any costs balance in its favour consequent upon the striking of a 'costs account' occasioned by the cross orders as now made.

Costs of today

28. Each side has won one argument in the course of a hearing which it seems unlikely in the circumstances could have been the subject of agreement.

29. It seems to me that the fairest order is that there be no order as to the costs of and occasioned by today's hearing. I make an order nisi to this effect.

Representation:

Mr Malcolm Kemp of Messrs Stephenson Harwood & Lo, for the Plaintiff

Mr Paul Carolan, instructed by Messrs Minter Ellison, for the Defendant

HCCL 10/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO.10 AND NO.61 OF 2002

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J U D G M E N T

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Introduction

1. This is a dispute about whether a contract of employment ever came into existence between the parties to this litigation.

2. The plaintiff, Miss Elizabeth Harrington, an American lady, is a management consultant. Upon taking early retirement in September 2000 as a US partner with PricewaterhouseCoopers, seconded to Hong Kong, she sought employment with the defendant, Cap Gemini Ernst & Young Limited, a Hong Kong company which provides management consultancy services in Asia.

3. There is no doubt that Cap Gemini, as I shall henceforth term it, wished to employ Miss Harrington. The focus of this case is whether at any time a contractual relationship existed between them and, if it did, whether and to what extent the provisions of the Employment Ordinance, Cap.57, impacted upon any such relationship.

4. A curious feature of this litigation is the existence of two separate actions involving the same factual matrix.

5. The relief sought by the plaintiff in the first action, mounted by writ dated 20 February 2002, included both a claim for specific performance of an agreement to provide a written contract embodying the terms of an oral agreement, whereunder it had been allegedly agreed that the defendant would employ the plaintiff for a period of two years - this form of equitable relief being sought in an attempt to circumvent the provisions of section 5(2) of the Employment Ordinance - and also a claim for damages for breach of that contract.

6. At the interlocutory stage the defendant took the point that under section 7 of the Labour Tribunal Ordinance the damages element of the claim fell within the exclusive jurisdiction of the Labour Tribunal, and hence moved for a stay of this part of the case. The issue came before this court in June 2002, wherein it was ordered that the claim for damages formally be remitted to the Labour Tribunal, together with a direction to the presiding officer of that tribunal that this element be remitted back for trial in the High Court.

7. This procedure occasioned a brief hiatus, and also necessitated a separate action number upon such remission of this part of the claim. After this procedural roundabout, the two actions were consolidated, and thereafter proceeded in normal course.

The factual background

8. There is little that factually is in dispute in this case; to the contrary there is a very large measure of common ground.

9. Perhaps the only factual issue of note which the court is required to resolve is as to what was, or was not, agreed during a telephone call between Miss Harrington and Mr Bayless of the defendant on March 22 or 23, 2001. But this is to get ahead of the story.

10. Miss Harrington, as I have said, is a management consultant of seniority and, I have little doubt, a lady of considerable expertise. At the date of her retirement as a partner with PricewaterhouseCoopers ('PwC') she was 59, and notwithstanding a generous retirement package from PwC she evidently felt that she had a good deal still to offer within the field.

11. Hence, when she was approached by Cap Gemini in October 2000, upon the recommendation of Dairy Farm, a mutual client, she became interested in working for Cap Gemini, which at that time was planning to build its China practice, and was looking for someone of Miss Harrington's background and experience.

12. After an initial meeting with Mr Freicke of Cap Gemini, detailed discussions and negotiations ensued, and in December 2000 Miss Harrington was interviewed by various senior executives within Cap Gemini. As she stated, and I have no reason to doubt, "our discussions went very well" and "I seemed to have the right experience, skills and client fit to match [Cap Gemini's] requirements."

13. The factual detail in this case centres upon the course of these discussions and negotiations, which went through a number of twists and turns, and in substance continued from these beginnings until early October 2001, when by letter dated 2 October 2001 Cap Gemini through its Regional Legal Director informed Miss Harrington that it had decided "to withdraw all outstanding offers of employment to you", this letter further stating that "as you have never accepted terms under which [Cap Gemini] was prepared to employ you, [Cap Gemini] believes that no agreement has ever been reached."

14. Although the negotiations, in their various forms, ultimately spanned the period December 2000 to October 2001, the issue the subject of this case - namely, whether an employment contract came into existence between Miss Harrington and Cap Gemini - is restricted to a consideration of events as they occurred at a relatively early stage, and in particular focuses on the period February to March 2001.

15. It is apparent that although Miss Harrington in fact continued to negotiate with Cap Gemini until the eventual termination of all contact between them in October 2001, she did so on the basis of a reservation of accrued rights, and no point has been taken, or pleaded, that in thus continuing to negotiate and in attempting to conclude agreement with Cap Gemini on a basis different from that now asserted to be the contractual agreement that there has been any waiver of such rights, or that by reason thereof Miss Harrington otherwise is precluded from asserting that a contractual relationship came into being between herself and Cap Gemini at the latest by the end of March 2001.

16. It is common ground that consequent upon the early negotiations between the parties two draft letters of appointment were sent to Miss Harrington by Cap Gemini. Neither has been signed.

17. The first was dated January 19 2001, and was quickly superseded. Its only relevance is that in Clause 15 thereof, which is the clause entitled 'Probation, Resignation & Termination of Service', there are therein three distinct elements : first, that the first six months of service would be probationary, and that during that period either party could give written notice of not less than one month, second, that on completion of the probationary period that the employment may be terminated by either party at any time by the giving to the other of two months' written notice, and third, that the employment may be terminated forthwith without notice in the event of wilful neglect or misconduct, that is, 'for cause'.

18. This initial draft was replaced by a further draft Letter of Appointment dated February 1, 2001. In the context of this case this is a significant document. It offered Miss Harrington employment as Vice President, Consumer Product, Retail and Distribution, Greater China, with a potential compensation package, comprising base salary and performance bonuses, of US$1,040,000. No term of employment was specified, albeit Clause 15 had been amended; now it was entitled 'Resignation & Termination of Service', and when compared with the first version of that clause had had the provisions relating to probation removed, so that there remained provision therein for mutual contractual termination upon two months' notice, together with termination 'for cause'.

19. The deletion of the provisions as to probation had been the result of Miss Harrington's specific objections. However, she remained unhappy at the prospect of termination on two month's notice, since she was anxious to secure a fixed term of employment with Cap Gemini. Moreover, although she had been sent this second draft Letter of Appointment, it is not in dispute that she had been asked not to sign it pending resolution of difficulties which were posed by the retirement arrangements which then were in place between Miss Harrington and her former employer, PwC.

20. Miss Harrington's relationship with PwC has formed a theme running through this case. When she had retired from that firm Miss Harrington had secured that which she herself described as an advantageous retirement package, which contained not only monetary and health coverage benefits (the latter being particularly important to her, since her husband was a transplant patient), but also, and unusually, Miss Harrington had been permitted in retirement to continue to service five major clients, including Disney and the PRC Government, upon a global basis. Apparently, also, under this arrangement Miss Harrington could continue to act for these clients whether working independently or for another company.

21. On 7 February 2001 Miss Harrington had a telephone conversation with Mr Bayless, the senior executive of Cap Gemini with whom she had been negotiating; in that conversation she was asked to approach PwC to request approval for her to serve all of Cap Gemini's existing clients in Asia, which would of course have infringed upon the existing PwC 'five clients' exception. It is not in dispute that it was in this conversation that Miss Harrington was told that she should not sign the draft Letter of Appointment of February 1 2001 until PwC had given its approval to Miss Harrington joining Cap Gemini and to servicing its existing clientele. Evidently Cap Gemini was concerned that there should be no allegation that it had induced Miss Harrington to violate the terms of her retirement agreement with PwC.

22. In the same conversation of 7 February 2001 Miss Harrington had asked Mr Bayless for a letter confirming Cap Gemini's offer of employment; she told the court, and I accept, that she was not prepared to approach PwC without "some kind of guarantee" from Cap Gemini. Mr Bayless had understood this request, and is said to have indicated that his superior, Mr Spence, was prepared to offer her employment for a fixed two year period, and that this assurance would be put into writing. In her evidence Miss Harrington said that at this stage she had understood that there was a firm contract in place between herself and Cap Gemini.

23. Be that as it may. It had also been agreed that Cap Gemini's lawyers would be preparing a draft letter for Miss Harrington to send to PwC to assist in her attempt to secure the latter's approval to the change in her retirement terms, and this draft was received by her two days later, on 9 February 2001. However, Miss Harrington was not willing to go to PwC to seek a release from her existing covenants until Cap Gemini formally had committed themselves in writing to her employment with them.

24. Further telephone conversations followed with Mr Bayless, on March 1, 5 and 7 2001. In the conversation of March 1 Miss Harrington said, and I accept, that she had emphasized to Mr Bayless that due to the "risks" she considered she was assuming in even approaching PwC in a bid to alter her existing retirement arrangements, she should have a two year contract which could not be terminated save for cause; it is tolerably clear, also, that this risk to her of a potential loss of her PwC retirement benefits, and the necessity for guaranteed employment, continued to be referred to in her other telephone conversations with him. Her evidence was that Mr Bayless had said that Cap Gemini would provide her with a signed contract of employment for two years as soon as PwC had given their consent to the course of action that Miss Harrington was to propose.

25. Consequent upon these conversations, Mr Bayless wrote to Miss Harrington in a letter dated 16 March 2001. This letter is perhaps the most important document in this case, and forms an integral part of Miss Harrington's case. It states, in material part :

"Dear Elizabeth,

This letter is to confirm our discussions related to the offer of employment we have extended. We understand that in order to accept this offer of employment to work in Hong Kong and provide leadership and service to the Cap Gemini Ernst & Young client base, you need to obtain formal permission from your former employer, PriceWaterhouseCoopers (PWC).

You have expressed concern as to what action PWC might take in response to an inquiry on your part for permission to take up employment with Cap Gemini Ernst & Young. You have solicited what action Cap Gemini Ernst & Young can take to mitigate those risks and I have indicated that there are no actions that we can take to mitigate those risks. Cap Gemini Ernst & Young is willing to offer a firm commitment of employment for a two year period (twenty-four months) from the date of joining. This offer is conditional upon the Terms and Conditions of the offer letter and we draw your attention to Clause 15 in particular ..." (emphasis added)

26. Several days later, on 22 or 23 March 2001, there was a further telephone conversation between Miss Harrington and Mr Bayless. It is this conversation which ultimately forms the crux of this case, and I revert to it later in this judgment.

27. In the event, on 27 March 2001 Miss Harrington sent to PwC the letter which had been drafted for this purpose by Cap Gemini's attorney, Mr Archer. By this letter, which speaks for itself, Miss Harrington advised Mr Scalia, Head of Partner Affairs at PwC, that she was in receipt of an offer from Cap Gemini Ernst & Young to become an employee of that organization, situated in their Hong Kong office, and further advised that the services asked of her were not only to directly provide services to her existing five major clients but also to provide any incidental services in support of existing Cap Gemini Ernst & Young clients. In this regard, confirmation was requested that "should I accept such an offer, this would not cause any problems with our agreement as to retirement payments and benefits".

28. PwC's initial response came on 11 April 2001. It was not favourable, stating that if Miss Harrington were to provide services to Cap Gemini, problems relating to her PwC retirement payments and benefits would be inevitable.

29. Thereafter Miss Harrington embarked upon "lengthy and costly negotiations" with PwC, about which she kept Mr Bayless informed, and in late May 2001 she succeeded in negotiating a deal which gave her approval to work for all of Cap Gemini's clients in Asia, but that she had to give up her right to consult for her five approved clients or a global basis; under this revised deal, she would be able to work for these five approved clients within Australasia only.

30. PwC's formal consent to this revised arrangement came in the form of a letter dated 30 May 2001. Upon receipt of this letter Miss Harrington forwarded a copy to Mr Bayless and spoke with him on the telephone the following day, in which conversation Mr Bayless confirmed to Miss Harrington that she could sign the letter, as amended, and return it to PwC.

31. In early June meetings were held in Hong Kong between Miss Harrington and executives of Cap Gemini preparatory to her joining the firm, and in anticipation of imminently receiving a formal employment contract Miss Harrington engaged property consultants to look for an apartment in Hong Kong.

32. It is undisputed that no further letter of appointment was ever sent to Miss Harrington by Cap Gemini.

33. On June 18, 2001 Miss Harrington had a further telephone conversation with Mr Bayless in an attempt to ascertain the status of her contract, and thus enable her to sign a lease for an apartment in Hong Kong. During this conversation the proposed starting date for her employment was varied to 3 September and Mr Bayless mentioned, also, a possible delay of the contract given that Cap Gemini's Human Resources department was asking for a six month probation period to be included. Miss Harrington indicated that this suggestion was unacceptable - so far as she was concerned she reminded Mr Bayless that she had a guaranteed two year deal.

34. However, on 18 July 2001 Miss Harrington received an email from Caroline Lim, head of Cap Gemini's Human Resources unit. This letter came as rather a bombshell. Miss Lim wrote thus :

"... An outstanding issue that I wish to address concerns your request for a two-year guaranteed employment. Since the offer letter was sent to you in February, CGE&Y top management have directed that all CGE&Y entities are prohibited from issuing terms in employment contracts which are inconsistent with CGE&Y Group policies. As it is against our policy for any CGE&Y entity to guarantee an employee a minimum term of employment, and as the letter of appointment dated February 1, 2001 had already lapsed and is revoked, we are preparing a revised letter of offer which will be emailed shortly for your consideration. Please also note that a six-month probationary period will be applicable, as this is a standard requirement for all new hires into CGE&Y without exception. Other than these two points, there should not be any major changes in the revised letter of offer ..."

35. Miss Harrington was alarmed and surprised. She took legal advice, and then wrote to Mr Bayless on 23 July 2001. This letter marked a watershed in her relations with Cap Gemini. It reads, in material part :

"I received Caroline Lim's e-mail of July 19 on which you and Paul Spence are copied. As a long term senior executive, I understand corporate policy occasionally changes.

However, I have met with one of my attorneys in Asia to review the February 1, 2001 contract and your March 16, 2001 letter confirming Paul's offer of a 'firm contract of employment for two years from the date of joining.' You will recall that we discussed the meaning of that offer was 'no termination except for cause' during the two year contract and the language of Clause 15 would be clarified to reflect that. The offer was subject to my obtaining clear 'permission of employment with us (CGEY) from PwC' and approval to serve all CGEY's clients in Asia so we could build a strong practice. I have fulfilled those requirements - and given up some of my valuable rights at PwC to do so. My attorney advises that the contract and letter constitute a binding agreement."

36. It is evident that this letter, and the fact that Miss Harrington had consulted lawyers, was a material factor in the decision by Mr Spence, whom since 1 June 2001 had become CEO of Cap Gemini Asia, to withdraw from further negotiation with Miss Harrington, and not to proceed further with the issue of her employment. In a telephone conversation with Mr Bayless Miss Harrington had been informed that Mr Spence had been "polarized" by this letter, and Mr Spence's attitude is clearly spelled out in his internal email of July 23, 2001 to Mr Bayless and Miss Lim :

"Gang

This is not the way to start a successful career here. I do not want to hire Elizabeth. She is too expensive, and she is not going to make the difference in Greater China. Lets move this out of Charles hands and have Terence handle it with her attorney, if that is what she wants."

37. That which occurred subsequently, during the period July to October 2001, was that in an effort to rescue the situation, further negotiations continued between Miss Harrington, Mr Bayless and Mr Crawford, another senior executive of Cap Gemini with responsibility for a different arm of that firm; Mr Crawford had told her, on 31 July 2001, that she appeared to be a victim of "bad timing" in terms of leadership changes within the firm. Thereafter, in an email of 16 August 2001, Mr Crawford wrote to say that "a lot had changed" in the consulting industry, which then was dramatically downsizing, and that at Cap Gemini there had been an earnings restatement which significantly lowered its market capitalization.

38. In the event, a new offer was sent to Miss Harrington in the form of an email from Mr Bayless of August 20, 2001, which proposed a one year fixed employment contract, and thereafter an open contract "subject to the normal performance management process", an offer which Miss Harrington made clear, in her letter of response of August 26, 2001, that she was considering without compromising her rights under what she perceived as the existing agreement that she already had with Cap Gemini :

"As we have discussed, we have a binding contract from our February 1 and March 16 offer letters which is scheduled to commence on September 3, 2001, my agreed upon start date in Hong Kong. However, in the spirit of beginning our work together as a team successfully and on schedule, I am prepared to consider your revised offer of a one year guaranteed employment contract with some refinements to the proposal listed below. In responding to your proposal I am in no way compromising my rights under our existing contract ..."

39. For this new contract there was to be an anticipated start date of October 1, 2001. In this instance, however, no formal contract was to be forthcoming either. The tragedy of 9/11 in New York intervened, with commensurate damage to the world economic climate.

40. Once more, therefore, negotiations had come to naught, at least in terms of any formal contract, and, as earlier recited, all communication between Miss Harrington and Cap Gemini terminated with the Regional Legal Director's letter of October 2, 2001. Thereafter, proceedings in this case were issued by Miss Harrington on 20 February 2002, the cause of action being confined solely to the agreement allegedly reached between the parties at the end of March 2001.

The evidence

41. In addition to the available documentation, a total of four witnesses gave viva voce evidence. Miss Harrington was the only witness on her behalf, whilst for the defendant three witnesses were called, namely Mr Paul Spence, Mr Charles Bayless and Miss Caroline Lim.

42. My impression is that all of these witnesses attempted to give their evidence honestly whilst at the same time seeking to maintain the parties' respective contentions, and given the large incidence of common ground which emerged as the evidence unfolded, save for one narrow instance there is no necessity for the court to be in the position of having to prefer one account as against another.

43. Even in the one instance in question, namely that which transpired in the telephone call on March 22 or 23, 2001 between Miss Harrington and Mr Bayless, the lack of specific recollection by Mr Bayless of this particular telephone conversation means that the evaluation of the evidence involves more a judgment upon the probabilities as to that which transpired rather than the necessity to reach any conclusion as to personal veracity.

The issues for decision

44. At the outset of this trial counsel on each side were able to agree a list of issues for decision in this case. Six such issues were identified, and I am content to frame this judgment along at least the broad lines thus defined. In fact, these six issues can be subsumed under three heads, as hereafter appears.

(i) Was there a contract?

45. This head encompasses the first two agreed issues of fact, namely, whether the defendant offered the plaintiff a contract of employment for a fixed term of two years that was not terminable within that period save for cause, and, if so, whether the plaintiff accepted such offer so that a binding agreement was entered into between the parties.

46. This represents the major point of departure between the respective cases.

47. Miss Harrington says that the answer is clearly 'yes', and that it is possible to identify a clear contractual obligation from the terms of the draft Letter of Appointment of February 1, 2001, taken together with the terms of the letter from Mr Bayless to her of 16 March 2001, as supplemented and clarified by the telephone conversation with Mr Bayless of March 22 or 23, 2001.

48. At this point, it is submitted, the sole material aspect which remained further to be concluded was the issue of that which, for convenience, may be termed the 'PwC release' from her existing covenants, which would enable her to service all of Cap Gemini's existing clients, as opposed to the five major clients for which she already had PwC's blessing. So that when this release from PwC was obtained, albeit at the price that was extracted - namely the loss of the ability to serve the five clients on a global, as opposed to an Australasian basis - the agreement which she had obtained from the defendant crystallized, and there was in place a clear contractual obligation between herself and Cap Gemini.

49. The defendant, on the other hand, whilst for the most part not disputing Miss Harrington's account of the events that took place, takes the primary position that Miss Harrington is in error in having interpreted the position in the way that she has. The defendant says, with equal conviction, that in fact the parties never were ad idem, and that no contract ever came into existence, whatever Miss Harrington may have thought, or indeed still continues to think. That which undoubtedly had taken place, maintains the defendant, were detailed negotiations which never crystallised into contractual commitment.

50. I confess that I have not found this an easy question to resolve, and it is a matter that has occasioned considerable reflection.

51. The undisputed context within which the negotiations were conducted provides a convenient starting point. There is no doubt, and in any event I so find, that during the discussions which took place between Miss Harrington and Mr Bayless in the early part of 2001, there were two major, and clearly discernible, considerations at play in their exchanges.

52. First, if she was to join Cap Gemini Miss Harrington was set upon obtaining a fixed term of employment of at least two years. In this connection she said, and I accept, that she would not have considered risking going back to her former employer, PwC, and effectively renegotiating her already advantageous retirement package, unless she had securely in place from Cap Gemini the assurance of a continuous period of employment for two years. This had been her consistent position, at least as from February 7, 2001, when it was first suggested to her that in order to be employed by Cap Gemini she should be in a position to work for all of Cap Gemini's clients, and hence it would be necessary for her to go back to PwC and to obtain a release from her existing covenants.

53. The other side of this coin, so far as Cap Gemini was concerned, was that not only did they not want their new senior executive to be subject to restrictions in terms of servicing their existing clientele, but equally, in employing Miss Harrington, they did not want to cut across PwC's bows and to become embroiled in a dispute which potentially might see them accused of acting in a way that might be said to have induced Miss Harrington to breach her existing obligations to her former employer. Much better, therefore, for the 'PwC element' to be sorted out at the start.

54. This then was the background to the request, by Mr Bayless, that Miss Harrington should not sign the second draft Letter of Appointment of February 1, 2001.

55. In fact, Miss Harrington did not wish to do so anyway, since this draft pointedly did not meet her principal requirement that she should have the security of a fixed term of employment; as earlier noted, this draft Letter was silent as to term, and Clause 15 contained within it not only the power to dismiss 'for cause' - an aspect which never had been in contention - but also retained the 'two months notice' provision, which so far as Miss Harrington was concerned flew in the face of her desire to secure employment for a term certain.

56. In his evidence Mr Bayless did not dispute this concern, and recognized that it was precisely this reason which lay behind Miss Harrington's request for a specific expression of commitment from Cap Gemini - which letter, of course, came to be that dated March 16, 2001 from Mr Bayless, to which detailed reference has been made earlier in this judgment.

57. It is evident both from the oral evidence, and from the contemporary documents in the form both of email and telephone notes, that notwithstanding the clear statement in the letter that "Cap Gemini Ernst & Young is willing to offer a firm commitment of employment for a two-year period (twenty-four months) from the date of joining", the reference which immediately followed that statement drawing attention to Clause 15 of the draft offer letter was something which caused Miss Harrington to seek immediate clarification of the position. It seems to me entirely understandable, and again I accept, that Miss Harrington's concern was as to the apparent discrepancy between on the one hand the expressed "firm commitment of employment for a two year period" in the letter of March 16, 2001, and on the other the specific reservation of the right to terminate on two month's notice, which remained enshrined within Clause 15; the probation requirement, which had been in the first draft letter of appointment of January 2001, had of course already been removed consequent upon Miss Harrington's earlier objection.

58. Perhaps it does not greatly matter, when he sent his letter of March 16, 2001 with its attendant reference to Clause 15, whether Mr Bayless had spotted the logical inconsistency which was to concern Miss Harrington, although I am inclined to conclude that he had not then focused upon it; he struck me as a straightforward man, who whilst naturally keen to uphold his client's position in this case nevertheless took care in his evidence neither to embroider nor to overstep the mark, and the likelihood is that this particular point has come to full flower with the benefit of subsequent legal advice. In any event, the foregoing forms the context against which the Harrington/Bayless telephone call of March 22 or 23 2001 falls to be evaluated.

59. Counsel agree that the way in which the evidence has come out in this case has resulted in this telephone conversation becoming the major point of contention between these parties - as Mr Carolan succinctly put it, did this telephone call, following upon the letter of March 16, 2001, "change the picture again"? In this conversation had Mr Bayless made it clear to Miss Harrington that the reference in the March 16 letter to Clause 15 should be read as being limited to termination for cause, and that the first part of this revamped clause, which maintained the requirement of two month's notice, was to form no part of their agreement?

60. As to this Miss Harrington was in no doubt. Her evidence was that in this call she had sought clarification of the 'two month issue' and that she was given precisely that. She put the position thus :

"I read Clause 15 and I telephoned Mr Bayless back and indicated that clause 15 referred to in his letter was entirely consistent with our discussions and Cap Gemini's guarantee of a firm two-year employment contract. Clause 15 undercut the two-year agreement. Mr Bayless told me that Cap Gemini's guarantee of a two-year employment contract could only be terminated for cause, the reference to Clause 15 was intended to be a reference to the second paragraph of Clause 15 only and not the first paragraph providing for two month's notice. Mr Bayless confirmed the firm two year employment with no termination except for cause and promised that the final contract would contain the correct language and wording. I believe this telephone conversation took place on March 22 or 23, 2001"

Thereafter in cross-examination, on the question of whether the letter of March 16, 2001 accorded with her requirements, she stated :

"It did not clearly express the terms that we had agreed upon previously, which was no termination except for cause. When I spoke to him about that and said 'Which part of clause 15 are you referring to? What is the intent of your reference there?', he said to me, 'What we are focusing on there is no termination except for cause'. I said 'Fine, if that is our agreement and understanding, that is okay. You will clarify that for me in the final contract?', to which he responded in the affirmative, 'Yes, I will' ..."

and later, when again pressed as to the letter, she said :

"It accorded with my requirements based on Mr Bayless confirming to me that his understanding of the reference to Clause 15 was no termination for cause and his confirming that to me and further confirming that the language would be clarified in the final document. The only problem with his letter of March 16th is that it is not clear ..."

61. In his witness statement Mr Bayless makes no reference to this conversation, which Miss Harrington had dealt with in her witness statement (at paragraph 30), although it was canvassed with him in cross-examination. The broad thrust of his evidence was that he did not recall the conversation in question, that it was likely that these were the concerns that Miss Harrington said she was presenting (indeed it was precisely the concern as to an assurance of a fixed employment period that had generated the March 16th letter), but that in the circumstances he would not have given an unconditional representation/confirmation to Miss Harrington; instead, as the designated negotiator for Cap Gemini, he would have referred the issue of 'two years certain' back to Mr Spence, with whom he was involved in terms of Miss Harrington's employment with Cap Gemini.

62. As to the detail of this particular telephone call, in cross-examination Mr Bayless accepted that Miss Harrington had called after receipt of the letter of 16 March, and had been concerned that the 'two month's notice' provision in clause 15 in effect destroyed the purpose of the commitment in the letter - "That sounds right" - and that it was "most likely" that she had asked for clarification in due course when the final contract was produced, but that :

"I would have taken that back to work with HR [Human Relations] and Paul Spence to see how we could reconcile that ..."

Thereafter, the following exchange took place :

"Q.	I suggest to you that it went slightly further than you saying 'Let us see what we can do.' You promised to her that that was not going to be a problem, that it was not even intended and that the final contract would reflect what she understood to be the level of your commitment?
A.	I would doubt that. Again, I was the point of contact, but I needed to broker between competing stakeholders, so [I was] not in a position to unilaterally reach agreement.
Ct:	Your competing stakeholders are Miss Harrington on the one hand and who within Cap Gemini?
A.	Paul Spence is the chief operating officer ... The other would have been Fred Crawford, my direct superior at the time ...
Ct:	The difference between the two of you in this debate is that whilst Mr Smith is suggesting to you in firm terms that you agreed to Miss Harrington's request, all you said you would do is to take it back to your principals and discuss it?
A.	Correct."

63. Shortly thereafter, when taxed by the fact that not long after this phone call Miss Harrington had sent the letter to PwC which had been drafted by Cap Gemini, and that she had done this when she did because she had obtained from Mr Bayless the necessary confirmation she had sought a few days previously, and that the conversation between them indeed had taken place as she had suggested, Mr Bayless responded :

"I understand your statement. I do not agree with it."

64. Mr Bayless agreed that on 31 May 2001, upon the necessary consent having been obtained from PwC, that Miss Harrington immediately had got in touch with him after faxing him the confirmatory PwC letter, and that amendment to the terms of that PwC letter was made consequent upon their conversation, but he did not recall any conversation to the effect that he was asked by Miss Harrington for a final assurance that a contract would be forthcoming before she signed this letter, with amendments, and returned it to PwC. However, he did agree that "there was still an intention to move forward and try and reach agreement on the terms" but that :

"There were material contractual elements that had not been agreed between the parties and therefore I would not have said, and I do not recall having said, there is a contract that exists between us. I would have said, as was the case, that we did still intend to hire her. We needed to get the details worked out ..."

65. The foregoing extracts from the evidence demonstrate how narrow is the point currently for decision. Mr Carolan accepts that for a contractual obligation to come into existence it is not necessary to have every term of the contract in place, and it is eminently clear that there were details, such as the ambit of health benefits, which remained outstanding even after the conversations in question.

66. However, upon the central issue, as presented to this court, can it be said that this telephone call of March 22 or 23, 2001, when viewed against the immediate background of the letter of commitment of 16 March 2001 and the draft offer letter of February 1, 2001, was sufficient to establish a contractual obligation on the part of Cap Gemini to Miss Harrington to employ her for a fixed period of two years?

67. The test, as counsel accept, is an objective one. It matters not what Miss Harrington privately thought, nor what Mr Bayless thought. Each has given this court the advantage of their views; Miss Harrington's suggestion in evidence that a contract had come into existence at a somewhat earlier stage was not pursued in final submission.

68. Moreover if, as appears to be accepted on both sides, all hinges on what was, or was not, agreed during this particular telephone call, it is the more unfortunate that in this particular instance there is no such record, notwithstanding that Miss Harrington described herself in her evidence as a "compulsive note taker", as evidenced by her scribbled notes relating to other conversations. In this regard I accept her evidence that at the time of this particular telephone call she was in the southern states of America and in the course of supervising a family bereavement, and in the circumstances I attach no negative inference to the absence of any such contemporaneous record.

69. At the end of the day the issue of what transpired falls to be decided upon the inherent probabilities, although I do not overlook the fact that it is Miss Harrington who possesses a specific recollection of this telephone conversation.

70. Whilst I bear in mind the evidence of Mr Bayless that 'fixed term contracts', in the true sense at least, did not and do not form part of the corporate culture within Cap Gemini, and indeed that no other senior executive within that firm had such an agreement - his own contract, for example, remains terminable upon three month's notice - on reflection this point does not carry the weight to which initially I was prepared to accord it.

71. On any basis Miss Harrington was in a special position, and, as Mr Smith SC pointed out, when negotiations thereafter continued, resulting in Mr Bayless' email of August 20, 2001, that which resulted was precisely an offer for a fixed term, albeit in this instance for one year instead of the two which throughout had been Miss Harrington's goal.

72. It seems to me that it is overwhelmingly probable that in light of her concerns at the time that Miss Harrington - who despite her charming demeanour struck me as a lady likely to have proved a tough negotiator, and as someone who did not entertain a diminished view of her own importance in the scheme of things - would not have taken the step of going to PwC, and potentially upsetting her retirement applecart, unless she had had in place the promise of a fixed term of employment, namely the two years which she consistently had sought.

73. The guarantee of, or commitment to, a fixed term, and the advisability of granting such to Miss Harrington, is something to which reference is made throughout Cap Gemini's discovered internal email correspondence regarding her employment, and it is clear that the concept of such a guarantee is a matter which excited concern among Cap Gemini's executives, in particular Miss Lim as Head of the Human Resources Division.

74. An email of July 16 2001 from Miss Lim to Mr Bayless recounted legal advice she had obtained from inhouse counsel about "the need for us to provide her with a two year guarantee as outlined in your earlier letter to her", and concluded that :

"... I believe it is critical for us to clearly inform her of our intention to have the six-months probation and that there will NOT be a two year guarantee of employment."

Whilst in an email to Mr Bayless of a month earlier, on June 6 2001, Miss Lim had emphasized that "before providing the final offer to Elizabeth" that :

"There should be NO 2-year guarantee of employment since there are no more issues surrounding her retirement from PwC. The clause indicating 6-months probation must be included in the offer ..."

75. This latter email, in particular, is perhaps revelatory of the mind-set of Cap Gemini at this stage. Whilst the executives at Cap Gemini apparently were working on the basis that as yet there was no concluded agreement, this message at the least tends to suggest a case of wishing to move the goal posts once the potential PwC obstacle had been removed. I do not wish to be unfair, and the cross-examination of Miss Lim on the point did not greatly assist, but it looks to me as if, in effect, the view was being taken that since the two year guarantee had done its job in terms of Miss Harrington moving to obtain the relevant PwC consent, there now could be no obstacle to reverting to 'normal' corporate hiring policy.

76. I bear in mind, of course, that these views were expressed after the telephone call of March 22 or 23 2001, and also, as earlier noted, that during this period Cap Gemini did not consider that an agreement was yet in place. What this does illustrate, however, is the extent of the concern that such a commitment to a two year fixed term in fact had been made to Miss Harrington, and I regard this as a circumstantial factor in terms of assessing the probability of that which was agreed in the critical telephone conversation between Miss Harrington and Mr Bayless.

77. Absent an agreement in the terms Miss Harrington has alleged, it is not easy to see why she would have behaved as she then did, and to get in touch with PwC in order to obtain their consent and so forth. In my view it would not have made a great deal of sense, in the circumstances, if she had embarked upon this course without having obtained precisely the assurance that it is undisputed that the letter of March 16 was designed to provide, and without, also, obtaining clarification of the logical inconsistency she had identified within that letter. I do not believe that at this stage she would have been content simply with an assurance that this central issue was something which could safely be left in abeyance for further consideration within Cap Gemini, as the defendant effectively suggests was the position.

78. Nor in the circumstances does it seem to me that there is any question of there having been no acceptance by Miss Harrington of the Cap Gemini position as reflected in the February 1 letter of appointment, as thereafter clarified by the March 16 letter and the subsequent telephone conversation of March 22 or 23 2001. If Miss Harrington is correct on this conversation, as now I have found her to be, the hard fact is that she had negotiated, and had obtained agreement to, the major terms of the agreement which she consistently had requested. The issue of her acceptance was accorded no profile within final argument, for the good reason, I suspect, that by reverting to PwC as she did, she demonstrated unequivocally her acceptance of, and satisfaction with, the clarified position; once PwC's consent had been obtained to the lifting of the 'five clients' restriction, save for certain outstanding details, no major term remained to be agreed with Cap Gemini.

79. Hence, I am prepared to find, and now so do, that there was consensus ad idem consequent upon the crucial telephone conversation, and that, to revert to the issue as framed, a contractual obligation had arisen to employ Miss Harrington upon the terms agreed for a fixed term of two years which was not terminable save for cause, subject to fulfilment, as subsequently occurred, of the condition requiring the necessary PwC consent.

80. If this be correct, as I believe is established on the evidence before this court, I move to consider the further matters contingent upon this primary conclusion.

(ii) The specific performance issue

81. This issue is shorthand for the third and fourth issues agreed by counsel to arise for decision, namely whether it was agreed that the defendant would produce a written contract of employment embodying the terms agreed, and, if so, whether the plaintiff is entitled to specific performance of such agreement?

82. I have alluded earlier in this judgment to the fact that this form of equitable relief is sought in an attempt to circumvent the provisions of section 5(2) of the Employment Ordinance, Cap.57. Sections 5(1) and 5(2) read as follows :

"(1)	Every contract of employment, which is a continuous contract, shall, in the absence of any express agreement to the contrary, be deemed to be a contract for 1 month renewable from month to month.
(2)	Notwithstanding that it is proved that a contract of employment is for a period in excess of 1 month such contract shall be deemed to be a contract for one month renewable from month to month unless the contract is evidenced in writing signed by the parties thereto."

83. Mr Smith has told the court that this difficulty had always been recognized by those advising the plaintiff, hence the prayer for specific performance of the agreement "whereby the defendant agreed to produce and sign a written contract embodying the terms of the employment contract made between the parties."

84. There is no doubt on the evidence, and in any event it is undisputed, that it had been accepted by Cap Gemini that upon the conclusion of agreement a formal contract would be sent to Miss Harrington; the fact that Cap Gemini did not send her a contract reflected their position, namely that in their view no contractual relationship had been concluded between themselves and Miss Harrington necessitating production of a such a document.

85. Having succeeded at the first hurdle, Mr Smith seeks specifically to enforce what he maintains is a separate binding oral agreement to sign and produce a written contract - an agreement which I note is pleaded to have been reached on February 7 and/or March 1 2001. If he is unable to get home on this contention Mr Smith accepts that his client is caught by the provisions of section 5(2) of the Employment Ordinance.

86. On the evidence I discern no such distinct and separate binding agreement. I remind myself that Miss Harrington was specifically told not to sign the draft Letter of Appointment of February 1 2001, although on her own case she would not have wished to sign that in any event, given the absence therein of a term certain and the presence of the two-months notice provision, the crucial aspect that was clarified only by the subsequent letter of commitment of March 16 together with the telephone call of a few days thereafter. Nor do I consider that her approach to PwC, upon which considerable reliance is placed, and which had resulted in PwC giving her the necessary clearance to work for Cap Gemini, in itself is indicative of the existence of the separate agreement such as now is sought to be established.

87. There certainly was an understanding that a formal agreement ultimately would be forthcoming which set out the agreed product of the negotiations, but in my view this formed part and parcel of the overrall contract negotiations, no more and no less. Mr Smith acknowledged that a mere 'understanding' was insufficient for his purpose, and after reflecting on the evidence I am unable to accept the contention that this understanding may conveniently be regarded as, or transmuted into, a separately identifiable and specifically enforceable agreement.

88. Accordingly, I find, as a matter of fact, that in this case there is no such independent agreement as that for which the plaintiff now contends. This argument strikes me as essentially artificial, and as a classification of the facts advanced solely by reason of the strictures imposed upon this claim by virtue of section 5(2) of the Employment Ordinance.

89. Accordingly, I decline the plaintiff's claim for specific performance.

90. Since I have not found the existence of any such separate independent contract which may be subject to specific performance, it follows that no basis is established for the so-called 'alternative claim', which was put forward in the alternative to the grant of specific performance. I confess that I was less than impressed by this 'alternative claim', which was raised, said Mr Smith, in the event that the court was to conclude "for one reason or another" that section 5(2) would preclude the recovery of more than one month's compensation, in which case the plaintiff sought damages in lieu. It is not easy to appreciate, if section 5(2) indeed were to have such an effect, why such a claim for damages in lieu would remain open; nor, in response to queries from the court, was Mr Smith able to explain why, under this head, it should have been thought that the plaintiff would be entitled to compensatory damages over five years at the rate of US$1 million per year, which is the way this part of the claim has been canvassed on the pleading. In fact during his submission Mr Smith appeared finally to conclude that the circumstances in which the court would find itself having to consider this claim "are probably realistically not there", and that on his argument there would be no difference between the quantum under the plaintiff's primary claim as under the 'alternative claim', namely a sum representing two years' damages.

91. In any event, whichever way it is put this 'alternative claim' - which contains within it not only a plea for damages but also that which appears to be a mutually inconsistent claim for wasted expenditure - is dismissed also. The short point, it seems to me, is that either the plaintiff is caught by the provisions of section 5(2) of the Employment Ordinance, or she is not. On the facts of this case I have held that she is.

92. The primary factual conclusion thus reached begs the interesting question, which does not now arise for decision, as to whether, if and in so far as there had existed an identifiable collateral agreement, such a contract could be specifically enforced notwithstanding the specific provisions of section 5(2)? I am told that there is no authority on the point.

93. Mr Carolan says that the answer to this is clearly 'No'. He says that such a collateral promise argument in effect runs a coach and horses through this statutory provision. Mr Smith contended to the contrary. He says that a party should not be allowed "to make use of statutory provisions in circumstances where such goes against the rights of the other party", a submission which seems to me to sidestep the analytical issue and to represent little more than a thinly-disguised 'merits' argument.

94. Section 5(2) is couched in stern terms : notwithstanding that it is "proved" that an employment contract is for in excess of one month, absent compliance with the necessary formalities this is "deemed" to be a contract for one month renewable from month to month. The Hong Kong courts have recognized the impact of this provision : see, for example, Law Shiu Kai v. Dynasty International Hotel Corporation and ors, 2004, unreported, a decision of Mr Justice Chung, wherein the learned judge concluded on the facts of that case that the necessary formalities had not been met notwithstanding a specific finding that there had been an agreement for a fixed term - although in that case no argument as to specific performance was raised by the plaintiff.

95. In light of the terminology of section 5(2), there no doubt is scope for dispute about whether it remains open to a party who has "proved" to the satisfaction of the court that he has an employment contract of "in excess of 1 month" nevertheless successfully to circumvent the statutory requirement for giving effect to such agreement by invoking the remedy of specific performance of a collateral promise. It might be said that the legislature has chosen to enact a provision which has the practical effect of circumventing precisely the type of argument such has occurred in this case. In this context Mr Carolan strongly submitted that there is no 'magic' in the 'separate promise argument', and that if an employee indeed successfully has "proved" an oral promise for a fixed term which, absent a written signed contract, is "deemed" to be a contract for one month renewable from month to month, there is no clear reason in logic or principle why he/she should be treated any less favourably than an employee who similarly is able to "prove" such an oral agreement, but whom further, and perhaps unusually, is in the position to "prove" a separate promise to produce a document satisfying the formalities of section 5(2).

96. The point is a difficult one, and in the circumstances of this case I did not derive much assistance from the authorities cited by Mr Smith, including the English decision of Giles v. Morris [1972] 1 WLR 307, wherein Megarry J (as he then was) emphasized the distinction between an order to perform a contract for services and an order to procure the execution of such a contract, and further held that the mere presence in a contract of one provision which, by itself, would not be specifically enforceable did not prevent the contract as a whole from being specifically enforced.

97. Much obviously will depend upon the particular factual matrix with which a court is faced, but on reflection I am unable to accept the proposition, persuasively canvassed by Mr Carolan, that absent a duly formalised contract that, in effect, must be that. This issue usefully could admit of appellate clarification, but for my own part I remain unpersuaded by the submission that the effect of section 5(2) is such as to preclude specific performance of a collateral promise to produce a signed written contract wherein circumstances dictate the grant of such remedy. Accordingly, whilst in this instance I did not find this to be the case, were I to be wrong in this primary factual conclusion I am of the view that the defendant's argument in this regard is not correct as a matter of law.

(iii) Quantum

98. The final two issues agreed by counsel are in effect matters of quantum, namely whether, by section 5(2) of the Employment Ordinance, the agreement is 'a contract for one month renewable from month to month', and, if so, whether the plaintiff's damages are limited to a sum equal to the amount of one month's wages by reason of sections 6, 7 and 8A of the Employment Ordinance.

99. In light of the conclusions reached earlier in this judgment, it is clear that the relevant quantum assessment is governed by the impact of section 5(2), and that given its findings this court will approach this case on the basis that the agreement in question was for one month, renewable from month to month.

100. Section 6 of the Ordinance deals with the termination of a contract by notice, and lays down the length of notice required to terminate a contract in different instances; section 6(2)(a), for example, says that in the case of a contract deemed by the provisions of section 5 to be a contract from month to month, and which does not make provision for the length of notice required to terminate the contract, such notice shall be "not less than one month". Section 7 deals with the issue of termination by payment in lieu of notice, which is irrelevant in this case, whilst section 8A deals with damages for wrongful termination of contract. Section 8A(1) provides that where a contract is terminated otherwise than in accordance with the statutory provisions as to notice, such damages shall be referable to "a sum equal to the amount of wages which would have accrued to the employee during the period of notice required by section 6 ..."

101. On behalf of Cap Gemini Mr Carolan says that if and in so far as the court gets to this stage of the analysis, and holds that Miss Harrington possessed any enforceable right against his client, the amount of damages due to Miss Harrington would be but one month's salary : this would be a section 5(2) situation, and on the basis of section 6(2)(a) and section 8A, the only sum to which she would be entitled is the amount which would accrue to her under the agreement for one month. Mr Carolan submitted that section 8A of the Employment Ordinance operates as a statutory form of liquidated damages, and that there is simply no scope to extend liability beyond it.

102. However, he does not stop there. He says that in calculating this amount no account can be taken of that element of her salary that involved bonus payments dependent upon performance. Thus, if in any agreement found to exist by the court the salary figure within the draft Letter of Appointment of February 1 2001 is adopted, the total "potential compensation package" therein, based on "maximum performance expectations", was stated to yield a total of US$1,040,000, of which US$480,000 represented bonus elements to be paid after the closing of the particular fiscal year. Hence in this case, he said, in base terms one month's salary should be US$560,000/12, which amounted to US$46,666 per month.

103. Central to Mr Smith's contention, of course, was that specific performance, or the 'alternative claim' in lieu thereof, was appropriate in this case. However, I have decided against him on this, and in the unusual absence of a written closing submission it is not clear precisely what otherwise is or is not accepted - I do not, for example, recall any submission from him upon the 'performance element' within the computation as to loss. Mr Smith did however venture the point, towards the conclusion of his final submission, that if the court was to be against his client, absent a written and signed contract, in terms of her claim for two year's compensation, then as a variation upon his primary argument there at the least should be an award of two month's salary, being the period of notice stipulated within Clause 15. I assume in this context that he was purporting to apply the provisions of section 6(2)(b) of the Employment Ordinance, which provides that in the case of a contract deemed by the provisions of section 5 to be a contract for one month, renewable from month to month, and which makes provision for the length of notice required to terminate the contract, the length of notice required to terminate the contract is to be the agreed period, but in any event not less than seven days.

104. Putting to one side the difficulty posed by a contract statutorily deemed to be for one month, renewable for month to month, which has a notice period of two months, the suggestion nevertheless made, should her primary argument be unsuccessful, that the plaintiff can secure two months salary by virtue of Clause 15, strikes me as ambitious, to say the least. In reply Mr Carolan was rather more trenchant in his criticism of this approach. The position seems to me to be tolerably clear. The plaintiff's unequivocal case was that she had an agreement for a fixed term of two years wherein there was no provision for early termination, and having failed on the specific performance argument, in my view it is not now open to her to invoke the provisions of a contractual term which she has insisted throughout this case had no application to her situation. It follows, therefore, that this additional argument must fail also.

105. Mr Carolan further submitted that in any event the plaintiff had "spectacularly" failed to mitigate her loss, noting that upon learning that the premise for the revision to the PwC agreement no longer applied - that is, that now she would not be working for Cap Gemini - she had not taken the opportunity to revisit PwC and to request reinstatement of the original PwC position permitting her globally to service the demands of her five permitted clients.

106. The issue of mitigation is not, I think, a nettle that needs to be grasped in the present circumstances, given that I have held against the plaintiff on the specific performance issue and also that, as Mr Carolan has pointed out, section 8A of the Employment Ordinance provides, as a matter of policy, a statutory form of liquidated damages, a proposition which seems to me to be correct.

107. If I be wrong, however, suffice to say that I accept Miss Harrington's evidence to the effect that, at the time of the renegotiation of the PwC retirement position, it had been made very clear to her that the position as revised by PwC was to be final, and that the matter would not further be revisited. On reflection I do not consider that in the circumstances it would have been reasonable to expect her to have returned again to PwC and to have attempted to undo that which, at the defendant's urging, she had spent considerable time and effort with her former employer to achieve.

108. To revert, therefore, to the agreed issues, I hold that, pursuant to section 5(2) of the Employment Ordinance, the agreement is one which is "deemed" to be 'a contract for one month renewable from month to month', and that the plaintiff's damages for breach of that contract are to be limited to a sum equal to the amount of one month's basic salary.

Order

109. By reason of the foregoing, therefore, the order of this court is that the defendant is to pay to the plaintiff the sum of US$46,666.00.

110. Absent agreement thereon, I will hear the parties on the twin issues of interest and costs.

Representation:

Mr Clifford Smith, SC leading Mr Kevin Egan, instructed by

Messrs Stephenson Harwood & Lo, for the Plaintiff

Mr Paul Carolan, instructed by Messrs Minter Ellison, for the Defendant

Appeal by the Plaintiff to Court of Appeal. Appeal dismissed. Please refer to the appeal judgment of CACV287/2004.

HCCL 10/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO.10 and No.61 OF 2002

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J U D G M E N T

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The Application

1. This is an application for security for costs pursuant to the defendant's summons dated 14 August 2002.

2. No offer of any amount of security has been made, and the matter is contested both as to liability and quantum.

The Argument

3. The fundamental issue in dispute in this case is whether a binding contract of employment was entered into between the parties. It is common ground that no formal contract was ever signed, and as part of her relief the plaintiff seeks specific performance to compel the execution of a written contract, thereby enabling her to pursue a claim based upon a two year fixed term of employment. Mr Carolan, who appears for the defendant on this application, has informed me that the plaintiff's damages claim, if successfully established, is worth in the region of US$2 million.

4. Mr Kemp, who appeared on behalf of the plaintiff, took issue both as to the defendant's entitlement to security for costs, and, if he was held to be wrong on his primary stance, as to the quantum sought.

5. He urged the court not to exercise its discretion to impose security for costs in the particular circumstances of this case. Whilst he accepted that the plaintiff was resident in the United States, he emphasised her continuing connection with Hong Kong in terms of her frequent visits and ongoing client activities, and the fact that she retained bank accounts here.

6. Mr Kemp submitted that this was a very particular case. It was, he said, not an inflexible rule that a plaintiff resident abroad should provide security for costs, and he pointed out that, but for the acts of wrongful conduct of which complaint was made in the claim, the plaintiff now would be ordinarily resident in Hong Kong. Thus to require security for costs from the plaintiff in such circumstances would be "akin to allowing the alleged wrongdoer to exact a premium from its victim who is seeking redress", citing in this context the judgment of Le Pichon J (as she then was) in Re Greater Beijing Region Expressways Limited (No.3) [2000] 3 HKC 608.

7. Mr Kemp further suggested that where, as here, the plaintiff is an individual and the defendant is a substantial business entity, that the balance of justice enured in her favour, and he also maintained that this application for security was being employed oppressively in order to stifle a genuine claim, citing in this instance the large (and unjustified) initial figure for security mooted by the defendant, albeit this figure subsequently has been considerably reduced.

8. I am unable to find a case of oppression here. Whilst the defendant no doubt would like to be rid of this claim, and indeed has not been hesitant to employ available procedural argument (vide the initial Labour Tribunal jurisdictional point (now resolved), together with the instant application), there is no evidential basis before me upon which a judgment may be made as to the potential stifling of a claim by means of the present application; indeed, there is no evidence whatever before me as to the plaintiff's personal circumstances. Nor at this early stage am I able to discern where "the balance of justice" lies, whilst Mr Kemp does not go so far as to suggest that this is one of those cases where the merits manifestly are all in his client's favour so that this is a 'must win' situation.

9. Which brings me back to the main thrust of his argument, which for convenience I will label the 'wrongdoer premium' point. Whilst this has a certain forensic attraction, it seems to me to fail, and fail clearly. With respect, the Greater Beijing Expressways decision is clearly distinguishable on its facts - the successful argument in that case being that security should not be imposed by reason of the very conduct complained of in the petition which had resulted in the change of residence of the company to residence outside Hong Kong.

10. In the present case, however, there is no question but that Ms Harrington now is ordinarily resident in the United States, and has so been since her departure from Hong Kong and her retirement from employment with Pricewaterhouse Coopers, subsequent to which she entered into negotiations (which she says came to fruition) regarding employment with the defendant. Accordingly I am unable to see why the undoubted fact that she would be in Hong Kong if the present dispute with the defendant had not arisen has anything to do with it; if indeed she was currently employed by the defendant there would be no dispute, and any consideration of security for costs would not arise.

11. At the end of the day, therefore, this strikes me as a 'bootstraps' argument which does not succeed. The court thus is thrown back onto general principles. As Mr Carolan pointed out, the 2002 Practice (see M/N 23/3/6) notes that "security will not be required from a person permanently residing out of the jurisdiction, if he has substantial property, whether real or personal, within it...the property must be of a fixed and permanent nature, which can certainly be available for costs...". And in this case, Mr Carolan submitted, there was no evidence of this nature whatever. All that had been condescended to was passing reference in argument to bank accounts, absent particulars, which was plainly insufficient. Nor was he reassured by Mr Kemp's suggestion that Ms Harrington's frequent visits to clients in Hong Kong would give the defendant ancillary procedural options (such as, for example, a 'stop notice') in terms of unsatisfied costs orders.

12. Viewed in the round I discern no reason why this case should be treated other than within the ambit of the normal rules governing security for costs, which procedure merely aims to provide a measure of comfort to a potentially successful defendant on risk as to recovery of costs, although it must be stressed that such comfort is not without limits, the security to be ordered being no more than a fund situate within the jurisdiction which is readily available for recovery of the defendant's taxed costs.

13. It follows, therefore, that in the exercise of my discretion I order that security for costs is to be provided. I turn briefly to consider the element of quantum.

14. As was made clear during the hearing, having decided the question of principle I propose at this stage only to make an order for security up to and including the completion of discovery.

15. I have been taken through the correspondence between the parties' solicitors. The present state of play appears to be that Mr Kemp's position is that the defendant's revised bill is excessive and duplicatory, and that a just figure to provide for security should be in the range of $60-70,000 - in fact in his excellent skeleton argument he posits a sum of $69,124, which is the result of his reworking of the defendant's revised bill.

16. For his part Mr Carolan notes that the revised appropriate figure had been calculated at $155,827, to which now should be added, he submitted, an additional sum of approximately $40,000 to take into broad account the costs of the present disputed hearing. He therefore sought a sum of in or around $200,000 for the initial stage up to and including discovery.

17. The quantum element of security for costs is not a matter for precise calibration and necessarily attracts a 'broad brush' approach. I have considered the relevant material against the backdrop of Mr Kemp's criticisms. At the end of the day I have to grasp the nettle and pick a sum which in all the circumstances strikes me as fair and reasonable in the circumstances of the case.

18. After reviewing the papers, my conclusion is that the plaintiff is to provide the sum of $125,000 by way of security for costs up to the completion of discovery, such sum also to take into account the costs of the present application. I so order. Absent agreement as to the furnishing of an appropriate bank guarantee, such sum is to be paid into court, to be held in an interest-bearing account, within 28 days of the date of this judgment. There is to be no interim stay of proceedings pending the provision of such security, but if and in so far as such sum be not provided within the stipulated period, there will be a stay of proceedings in these actions pending further order.

19. As to the costs of this application, the position as I understand it is that the plaintiff has resisted the application for security throughout, and that no offer has been or is on the table. In the circumstances the costs of this application must be to the defendant in any event, such costs to be taxed if not agreed. I make an order nisi to this effect.

Representation:

Mr Malcolm Kemp of Messrs Stephenson Harwood & Lo for the Plaintiff in both actions

Mr Paul Carolan, instructed by Messrs Minter Ellison for the Defendant in both actions